Sturbridge Company manufactures fine furniture and grandfather clocks.Sturbridge has an excellent reputation,and each grandfather clock sells for several thousand dollars.Which of the following is an indirect cost,assuming the cost object is the Clock Department?
A) Salary of the clock production supervisor.
B) Depreciation on the factory building.
C) Depreciation on clock-making equipment.
D) All of the answers are correct.

Question

Quizplus · Accepted Answer

Depreciation on the factory building is an indirect cost because it cannot be directly traced to the production of a specific grandfather clock. It is a cost that is incurred to support the Clock Department's operations, but it is not directly tied to the production of a clock. Salary of the clock production supervisor and depreciation on clock-making equipment are both direct costs because they are directly tied to the production of a specific grandfather clock. Therefore, D is incorrect.

Sturbridge Company Manufactures Fine Furniture and Grandfather Clocks